Friday, November 21, 2008

Santa Claus is Coming to Town

For now, congress has closed the door on a proposed bailout of the major American automakers. Lawmakers feel that the automakers failed to convincingly argue for their need for the money, as well as describe a plan for how they would restructure their business model once they had the money so that they wouldn't have to come begging for more in a few months.

But congress didn't close that door completely. They've given the automakers two weeks to come up with a new plan. If they can, and they are “convincing” enough, then congress will consider giving them 25 billion dollars of tax payer money. Of course, that would be in addition to the 25 billion dollars of tax payer money that congress has already given the automakers, just two months ago.

So if we just gave them 25 billion dollars, and just two months later they need 25 billion more dollars, then is it now the role of government to subsidize the American auto industry to the tune of roughly 150 billion more dollars a year from now on? Apparently, the successful self reliant people of this country are now being called upon to fund not only failed individuals, and failed banks, and failed insurers, and failed agricultural industries, but we are now to fund failed automakers as well.

Part of the defense of an auto bailout is that we can't afford the loss of jobs nationwide. By some estimates, as many as 1 in 12 American jobs is dependent on the auto industry, and every day the number of proposed job losses grows by leaps and bounds. They argue that if this industry fails then America will face further economic hardship, and that we just can't allow that to continue.

So you see, it's really in your best interest to bailout these auto manufacturers. After all, we can't afford to lose jobs, or to lose the revenue generated in the economy by this industry. But what if it were the porn industry? By some estimates, pornography generates between 4 and ten billion dollars annually. It also employs thousands of people, from actors, to directors, sound and lighting technicians, camera men, internet tech specialists, delivery drivers, and store clerks. If the porn industry were to suddenly face economic collapse, and all those people were facing unemployment, and all that money was going to disappear from the revenue stream, do you think congress would consider bailing them out, even though it would require far less money to do so?

Let's pick something a little less controversial. How about video games? In 2007 the industry made close to 19 billion dollars, more than twice that of pornography, and employs roughly 25,000 people in the U.S. alone. What if this industry were to face collapse, possibly causing programmers, marketing personnel, hardware manufacturers, delivery drivers, and sales clerks to all face unemployment? What about all the boutique stores which specialize in video games? They would also face shutting their doors. What about all the online video gaming services? What about all the ancillary marketing that takes place in and around video games? Even Barack “the future” Obama advertised in a video game recently. Would the government consider bailing out this industry, even though it would cost far less than the 25 billion dollars the auto industry is asking for again? What about all those poor video game fans who would lose their sole source of enjoyment in this world?

I think we all know the answer. While congress is more than happy to bailout insurance companies like AIG, and banks like CitiBank, and automakers like GM, there is no way they are going to bailout the pornography industry, or the video game industry, or the cigarette industry, or the firearms industry, no matter how many jobs stand to be lost. It doesn't have to do with the welfare of the people, and you know it. It has to do with who has the ear of the king. And because of that, you also know that the automakers will get their money, they'll just have to wait until christmas to open their present.

The idea that a proposed loss of jobs is any justification for government subsidization of private industry is based on pure fear mongering. You could be next! You could lose everything! If we don't act, the whole country will descend into chaos and zombies will roam the streets! It's ridiculous. Remember before they passed the 700 billion dollar wall street bailout bill, you know, the one they still haven't spent a dime of, and they were telling everyone that people would be thrown out on the street, and get kicked out of school, and no one would get their paycheck next week because business used credit to pay their payroll, and your ATM wouldn't give you money? Remember how they said that would all happen if they failed to pass this bill? Well, they still haven't spent a dime of it, and yet, you still have a home, and kids still go to school, and your ATM still works, and you're still getting paid. Now that doesn't make any sense. Hmmmm.

It is the same dog and pony show here. Everyone will lose their jobs and have to start eating rock soup if the automakers go under. Baloney. People will still need jobs, so there will still be jobs. People will still need to get places, so there will still be cars manufactured and sold. Maybe these companies won't be doing it, and maybe the companies that do won't be paying as much, but maybe that means they'll have a stable business model that won't require regular injections of government subsidies to survive.

Besides which, the worker doesn't own his job, and doesn't have any specific right to be employed. The company owns the jobs. The worker owns his labor. The company exchanges a job, and monetary compensation for the labor that the worker can provide. The more difficult, unpleasant, or skilled the labor the worker is able to provide, the more money he is generally able to get in return for that labor. It isn't GM's or our government's responsibility to employ anyone. If GM has a job, and you have labor, you may enter into a contract with them to exchange the two. Just because people might lose jobs doesn't justify using stolen money to prop up a failing business so that people can do jobs for which there is no current market demand.

I'm not saying there isn't a demand for cars, clearly there is, and so there is also a demand for people who can make cars. What I'm saying is that if there was a market demand for cars to be produced under the business model that these companies are using, then they wouldn't be facing complete financial collapse. Clearly, there are other auto manufacturers who are not facing complete financial collapse, because there is a market demand for their business model. It isn't that people don't need cars, it's that these failing companies are failing to produce them in a cost effective manner.

And that shouldn't be any surprise. After all, they know damn well that they can simply appeal to the king for money whenever their purse is light. And so what if it comes off of your back, the government is going to send you a bailout check soon too, so you don't need to worry. They'll just keep printing money, and passing it out, and everything will be fine. I'm sure that'll work.

It always has before.

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